Renewed talk of another Federal Reserve interest rate hike lifted the dollar against its major peers

In the wake of ongoing price distortions in the naira's exchange rate, the Central Bank of Nigeria (CBN) began the sale of $20,000 to eligible Bureaux de Change (BDCs) across the country.

The sale of dollars resumed two years after former CBN governor Godwin Emefiele stopped it.

Director of the Trade & Exchange Department at the CBN, Hassan Mahmud, issued a statement on Tuesday, titled "Sale of Foreign Exchange to Bureau de Change Operators to meet retail demand for eligible invisible transactions."

According to the statement, the sale has been resumed to rectify the persisting distortions in the foreign exchange market, revealing that a dollar will be sold at N1,301.

"Following the ongoing reforms in the foreign exchange market, aimed at achieving an appropriate market-determined exchange rate for the naira, the Central Bank of Nigeria has observed the continued price distortions at the retail end of the market, which is feeding into the parallel market and further widening the exchange rate premium," Mahmud clarified, Punch reported.

He added, "The sum of $20,000 is to be sold to each BDC at the rate of N1,301/$- (representing the lower band rate of executed spot transactions at NAFEM for the previous trading day, as of today, February 27, 2024)."

As per the guidelines, BDCs are allowed to sell these dollars at a margin of not more than one percent above the purchase rate set by CBN.

Furthermore, all eligible BDCs are supposed to make the naira payment to the designated CBN Foreign Currency Deposit Naira Accounts, along with submitting payment confirmation and other necessary documentation for disbursement at the appropriate CBN branches in Abuja, Awka, Lagos, and Kano.

BDCs are directed to do the buying and selling at approved office/outlet addresses only, no street hawking is allowed. Moreover, the daily reports of foreign exchange sales to end-users must be submitted before 10 am the next business day on the Financial Institutions Foreign Exchange Reporting System (FIFX) portal.

CBN governor Olayemi Cardoso noted on the same day that he or his team is not responsible for the financial crisis in the country, instead, he said that CBN is part of the solution.

"We are determined to ensure that we work hard to get out of the mess that Nigeria is in. We assumed responsibility in a time of crisis of confidence; there was a crisis of confidence and you may all want to go to bed and wish that crisis of confidence was not there but it was, and we can't turn back the clock," he said, Premium Times reported.

Cardoso explained that the department is making difficult decisions to ensure that Nigeria comes out of this situation. The country has been dealing with an economic crisis since President Bola Tinubu announced fuel subsidy removal after taking over the office last year.